What does a production possibilities curve (PPC) show? What is the difference between a PPC that is linear and a PPC that is curved away from the origin?
What will be an ideal response?
A production possibilities curve shows the relationship between the maximum production of one good for given a level of production of another good. The slope of the production possibilities curve shows how much of one good needs to be given up to produce an extra unit of the other good or, in other words, the opportunity cost of producing an extra unit of one good in terms of the other good. A linear PPC would show constant opportunity costs while a PPC that is curved away from the origin would show increasing opportunity costs.
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On a traditional supply and demand diagram,
a. price is measured along the horizontal axis and quantity along the vertical axis. b. price is measured along the vertical axis and quantity along the horizontal axis. c. quantity demanded is measured along the horizontal axis, quantity supplied is measured along the vertical axis, and price is indicated on the contour lines. d. quantity is measured along both axes and price is indicated on the contour lines.
A chart of the ratio of national debt to GDP from 1915 to 2014 would show
a. significant increases from 1945 to 1975. b. significant increases during World Wars I and II. c. a larger value in 1975 compared to 1945. d. significant increases from 1995 to 2003.